August 07, 2013

We have all heard the great pronouncement that "Print is Dead". This has reverberated through the press for a number of years and many have written about the pending doom of print media. I would say print WAS dead, and now we are starting to see a second coming. Perhaps not a triumphant, messianic second coming, but a second coming none the less.

Print was dead when it thought it could compete with "free" (i.e. the internet). It gave away its largest assets and its biggest competitive advantage, content. It learned the same lesson that most people did playing this game. It is hard to write checks for something that you give away. It just doesn't work out so well over time. Print media lost its way by trying to compete on the playing fields of others and it lost. Print lost its ability to sell advertising, capture and hold on to readers, and ultimately, its relevancy.

A few players corrected course quickly, the Financial Times comes to mind, but most rode the learning curve all the way to the bottom. Over this time period a few things happened. First, old blood left or got fired. Second, the deterioration in value made them cheap assets. Third, print started to find its way by a lot of trial and error. Let's start with the last period.

Simply put, trial and error is a great way of learning when you aren't the one paying for it. Over the last fifteen years, traditional media companies tried a lot of different things and most failed and destroyed their value. But some things worked and now we have a pretty good body of case studies on what works, pay walls, different levels/ grades of content for different outlets, pricing models for digital, etc. This experiment was bad for the legacy print companies, but great for the next generation of print companies. This leads to the next point, assets are cheap.

By historic standards, print products are cheap. The Wall Street Journal sell may have marked one end of the valuation scale six years ago and Jeff Bezos may be marking the other side, but the vast majority of the transactions for print media assets over the last six years have been cheap (Media General, Tampa Tribune, and the list goes on and on).

During this period of great value degradation, a lot of talent left the game either by force or by choice. When organizations have so much talent turnover a few things happen, old ways of doing things get lost in the shuffle and new talent takes over the reins. Both of these happen for better and worse. The bad talent, that has nowhere else to go, is promoted for their patience and diligence. Good talent has fewer obstacles in its rise to the top. Some good practices and processes get lost, but new thinking gets put in its place. When I take a step back and look at the bigger picture here, I see a rejuvenation of the space.

I see new talent and new money (Warren Buffett and Jeff Bezos to name a few). I see a pricing reset, which allows for further investments into the respective organizations. I see a solid foundation built by trial and error on what works. I think this is a good foundation for a second coming.

First, there is some stereotyping and playing up on the idea of tech entrepreneurs here. That is journalism, but I think most of the core of the article is pretty solid. Entrepreneurs are always working, always willing to take calculated risk, and always super passionate about their current best idea. This is in many ways, the key to their success.

I wish someone would write about all the unsexy parts of being an entrepreneur... Years of hard work with little return, countless rejections, living far below your means to dump money into development, working jobs just for cash while you develop and build, all the failures along the road, etc... Someone pick that story up and run with it.

September 16, 2010

Last week I revisited the book, Let My People Go Surf and a these two video presentations by Yvon Chouinard to help re-ground myself a little. I am in awe of many of the things Patagonia goes and the ethic by which they do them. It never hurts to sit back and enjoy what great companies and leaders do and how they do them. Yvon has a lot of practices that make a lot of people uncomfortable in business, but it is hard to argue with their numbers and the fact they have no debt. Much be doing something right...

September 12, 2010

Settling back in after a week away from the day to day grind that I got too wrapped up in over the last six months. I am surprised at how much I got done, which seems a little counter intuitive for 'vacation'. Like many, it is hard for me to unplug for more than a day or so (although this time I left Iphone and laptop behind, and lived off the Ipad). Weekends become added time to get things done and time just rolls by like a freight train. I think I am too important to be out of the loop, which is total shit thinking. From the looks of things, my staff did not burn the place down, my cell phone did not internally combust from the pressure of too many voicemails, and things kept going on as they should. On top of this, I made some major progress on some key projects I have been thinking about over the last year. Deep down, I knew this is how it would work, but lacked a little trust.

I have read about Tim Ferriss' leaving his business for a few weeks, heard stories of Bill Gates' "Think Weeks", and many other stories about managers, executives, and business owners all having the same experiences. Still, the last two years I have done a lot less of this than I should and been a lot less productive than the years before where I was better at taking this time away.

Often times we become road blocks to the smart, successful people we hire and don't allow them to do their best. I have witnessed this a lot over the last few years and may have even been guilty of it a time or two. Time away helps to restore confidence in staff and give them a chance to shine. It helps clean the trees out of the way of the forest.

I have always valued the idea of firing yourself from jobs and working to replace yourself in anything you do. Going forward this is getting back into the center of how I operate. Firing myself more from projects, tasks, and businesses, taking more time away to focus on the things that really need my attention, and moving on from projects where I don't add value. It is too easy to get caught up in thinking the world needs you more than it really does. With that, off to ponder if I should even go back at all...

Web startups are easy to bootstrap and easy to pop up with little to no starting capital. But this is not totally unique to web startups. Granted, your not starting a new airline this easy, but many business (service based) are as easy to start and equally light on capital needs, but starting a HVAC or repair business is not as sexy as a web startup. Not surprisingly, I know more successful non-web startup entrepreneurs, than those in the web space; even though, I know more entrepreneurs total in the web space. The sexiness of the web startups world is based on the misconception that it is easy. Entrepreneur's see crazy evaluations on Facebook, Twitter, etc… and think it is easy riches. Notable most of these entrepreneurs fail. Evolution works in capitalism pretty well and capital investment in the form of VC/ seed money lubes this process pretty well.

The real thought provoking part of Fred's comments are around the current status of the VC markets. This is the area I am most concerned with. One of his last points, is this

The venture capital business is contracting. There are less VC funds than there were a few years ago. And there will be fewer in a few more years. And the birthrate of web startups is expanding. That is the challenge we all face.

The alternative investment side of the capital markets gets hurt faster and more substantially when we have the market upheaval like we have the last few years. We are protectionist deep down inside and when things get scary, we like to pull back into our little turtle shell. This hurts the investment manager and advisors that play this important parenting roll for start-ups.

This maybe a newer occurrence for the web startup space, but startups in more mature spaces have been to this rodeo before. I think this is why they are less reliant on VC money for startup and growth. They bootstrap more and use more traditional lending markets and cash flow to grow businesses. This is a good thing for web startups to learn. It will make the quality offerings comes to market with a much better backbone and slow the innovation cycle down a little. While I like big innovation cycles and dynamic organizations, I think the web space needs a little refinement in this area.

There has to be a renewed interested in setting up startup funds, but the economics/ structures have to change a little before this happens on a grand scale again.

As a parting shot, I think this is a great way of thinking about VC/ seed investment.

I like to think of the venture capital business like parenting. When I invest in a company, I am committing to the care and feeding of the company until cash flow break even (the startup equivalent of adulthood). That care and feeding includes the decision to call it quits and give up on the project sometimes, but honestly that doesn't happen that much in our portfolios.

So when I look at this expanding birthrate, I think "who is going to house, feed, school, and send all these kids to college?"

These are advisory and naturing partnerships at the very core. If you are looking for capital, look to people with this ethic.

August 23, 2010

Seems like Fall is new venture launch time in my world. Last fall was the launch of 20/20 Fitness Centers and Mecafresh, and we have four new launches planned for this fall and one expansion project. More to come on those, but I wanted to take a look back at last years round on the eve of this new round and maybe start to flush out some thoughts.

First, I give myself a solid C- on last years round. There are a lot of reasons for this and the problems started with the idea excitement from the very beginning. Ideas are fun and sexy, no doubt about it. They hit you like bolts of lighting and run through you with the same force. At least for me, I get energized by the dynamic movements and eternal problem solving that comes from getting ideas to execution. I knew this excitement and passion for new deals had to be carefully monitored but my hubris in these two areas got the best of me, more than once during these launches. The projects where two Mecafresh locations, Evanston, IL and Stuart, FL, and a new gym concept, 20/20 Fitness Centers in Stuart, FL.

Since these two openings, I have spent a good deal of time thinking and working through idea flow, execution, and partnerships. These are the key areas where my solid A ability got translated into a solid C- execution. My frustration with this poor showing, turned into a desire to learn from the many mistakes with these two projects and I realized these mistakes aren't all that uncommon. In fact, I would venture to say they are the basis for most mistakes with launches. There is also no shortage of books/ thoughts on these three areas, don't believe me, search Amazon. I have read though many of them and found two I like on idea flow and partnerships, but I find myself still a little wanting on the topic of execution.

Over the next few posts, I am going to hash out some of these failures and some of the things I am going to change as this next round of launches start rolling out.

August 16, 2010

After a few weeks of 'testing' and a few years taking a break from writing in this form, it is time to get back up and running here. The goal here is to have a space to work out ideas around entrepreneurship, especially related to high innovation cycle and social enterprising businesses, and to talk about organizational and investment issues and strategies. Since my entrepreneurial background is around the areas of asset management and more traditional entrepreneurship, real estate, restaurants, and the like, this is a space to air out some thoughts on these newer forms of investing as I dive into them. I have made a few seed/ angel investments and been heavily involved in start-ups and advising for the last few years. This has given me just enough experience to be dangerous and just enough success to have the taste of blood in my mouth.

Traditional investing in the more established and liquid asset markets has become too over run with investors, too removed from the operations of the underlying asset, and too uncertain on the regulator side of the equation over the last few years. To be fair and accurate, it has become kind of boring. The operational side of putting ideas in action and executing is a lot more sexy these days.

We started adding to the start-up investing side of the portfolio and digging into more operational roles and advising about five years ago. I wish I could saythis has led to great success, but we are batting around 50/50 to date and have a few scars to show from our experiences. Since we obviously have a long way to go with this type of investing, I thought I would use this space to air out things we are learning from, things I am excited about, mistakes we have made, things our investments are struggling with, etc…

Also to be upfront, I hope this space welcomes a way to be introduced to other entrepreneurs, especially in the Southeast part of the US, so I can find other investment opportunities and new businesses to learn from and develop relationships with. Over the next few weeks, we will be adding more functionality to The Southerner Group website to help with this goal. This will give you a way to submit ideas and business models you are working on and looking for investment or advising.

I am not trying to create another time suck or put another thing on my plate that doesn't need to be there with this blog. My goal is too post good thoughts and interesting observation once or twice a week on average. So keep the bar low, as to make sure you get over it, then raise the bar.